Trinseo reports first quarter 2019 financial results

Net sales in the first quarter decreased 10 per cent versus 2018. The pass through of lower raw material cost resulted in a 15 per cent decrease in net sales.

These decreases were mainly due to lower margins in the Feedstocks, Performance Plastics and Latex Binders segments and lower equity affiliate income from Americas Styrenics. This impact was partially offset by higher sales volumes across all segments except synthetic rubber.

Overall, the results of the quarter were affected by macroeconomic dynamics in China as well as weakness in certain key markets such as automotive and tyres.

Net income was also impacted by higher pre-tax spending related to the transition of business services from The Dow Chemical Company.

Commenting on the Company’s performance, Frank Bozich, Trinseo President and CEO, said: “While improved versus the fourth quarter, our first quarter results were affected by continued weak automotive and tyre markets and the weak economic environment in China. Despite this, we delivered very strong cash generation in the first quarter as a result of actions taken to reduce inventory levels.”

First quarter cash generation

Cash provided by operating activities for the first quarter was $153m (~€137m) and capital expenditures were $25m, resulting in free cash flow for the quarter of $128m. First quarter cash from operations and free cash flow included approximately $105m of lower working capital. The company repurchased ~0.7 million shares in the first quarter for approximately $37m.

Commenting on the outlook for 2019, Bozich added: “While we have seen signs of improved demand across some of our markets, the automotive and tyre markets remain weak, as do many of the end markets in China into which we sell. Amid these conditions, we have initiated a number of working capital and cost initiatives to improve operating results. We are also evaluating strategic alternatives for our polycarbonate manufacturing facility in Stade, Germany, due to significantly declining polycarbonate margins resulting from low demand and new capacity in China. This is the first action from our ongoing strategic review of our business portfolio. We are cautiously optimistic about better economic conditions in the second half of 2019 and we remain focused on cash generation and cost management.”

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